Modeling oligopolistic price adjustment in micro level panel data
Abstract: "Consumer prices in many markets are persistently dispersed both across retail outlets and over time. While the cross sectional distribution of prices is stable, individual stores change their position in the distribution over time. It is a...
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Abstract: "Consumer prices in many markets are persistently dispersed both across retail outlets and over time. While the cross sectional distribution of prices is stable, individual stores change their position in the distribution over time. It is a challenge to model oligopolistic price adjustment to capture these features of consumer markets. In belief based models of price adjustment stores react to expected profits. The expectations are based on the observed vector of market prices in the previous periods. In a reinforcement model of price adjustment, if a strategy has proven fruitful in the past, it is apt to be the strategy relied upon at the present. We collect price data on a homogeneous consumer product in Israel. We estimate the structural parameter of the models. We find that the reinforcement model describes the data better than the belief based models." (author's abstract)
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Identification of network externalities in markets for non-durables
Abstract: "This paper introduces a structural econometric model of consumer demand for nondurable goods, which exhibits network externalities. The structural model allows us to identify the parameters, which determine the strength of the...
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Abstract: "This paper introduces a structural econometric model of consumer demand for nondurable goods, which exhibits network externalities. The structural model allows us to identify the parameters, which determine the strength of the externalities in the underlying economic model from the empirical estimation results. The estimates of these parameters can then be employed to test the economic significance of the externalities and the compatibility of networks. The identifying assumption that drives our results is that consumers care about the lagged instead of the current network size. We argue that it does not necessarily bound their rationality. To complete our structural model, we provide an example of functional specification that yields a simple linear stochastic model of demand. Using this functional specification, we identify all structural parameters of the model. In the end, the estimation and the stochastic structure of the resulting econometric model are discussed." (author's
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